In economics, stimulus spending ran aground on Robert Barro’s Ricardian equivalence theorem. This theorem says that debt-financed spending can’t have any effect because people, seeing the higher future taxes that must pay off the debt, will simply save more.

And here’s a graph showing US government debt:

And here’s a graph showing US savings:

Something wrong? The relationship seems to hold during WWII, although saving was appparently enforced as government policy during the war, but for the last 30 or so years Ricardian Equivalence seems to have been forgotten: government debt has increased signficantly while savings has declined. This trend is likely to change in the near future, as government debt increases, but surely this is due to households repairing severely over-leveraged household balance sheets rather than expectations of future taxes.

I really think it’s a fascinating time to begin a PhD, as for me the crisis has helped me to understand systems and policies that were previously taken for granted. That said, I think there’s been some over reactions–that the crisis marks the death of capitalism. I think what is more at stake (again) is a certain form of neo-classical, deregulated, laissez faire capitalism–which many thought was finished in 1929!

September 22, 2009

Interesting article from the Mail & Guardian on the state of judicial independence in South Africa. Citing comments from the Western Cape Premier, Hellen Zille, it suggests the judiciary is becoming a tool of internal party machinations. A way to keep Zuma inline and to quickly remove him should the political winds change.

The relationship between legal institutions and politics is something I plan to look at as part of my DPhil research, and South Africa could potentially be one of my case studies. Still, it’s (very) early days.

I don’t think anyone reads this blog, but, should they, I’d appreciate any suggestions for further reading on South African legal politics specifically as well as law and politics more generally…

September 14, 2009

Skidelsky, in his biography of John Maynard Keynes, discusses to considerable length the late 19th – early 20th Centuries preoccupation with distinguishing between good means and good ends—in the context of changing social and ethical values. The distinction Skidelsky draws is between Intuitionism and Utilitarianism, and he spends considerable time on the debates that raged about JMK while he was in Cambridge as an undergraduate in the 1900s. Although I’m less than a third along, he seems to be suggesting that these ethical shifts provided the basis for his character and possible also his economics and economic policy.

Given JMK’s centrality to 20th Century economics (and arguably government), I wonder whether there is a good paper that explores the ethics of development? Certainly there is a belief—I have certainly had such thoughts during my time in Indonesia—that development (and nation building) should be undertaken on ethnical grounds? Development implies change. Should (or is) this change be informed by ethics? Certainly Sen’s Development as Freedom gives development means a utilitarian value and, following in the footsteps of G.E.Moore, seems to suggest that certain states of mind have an utilitarian value in themselves.

But what are the implications for a development practitioner? It certainly leads to a number of questions:

What or whose ethics? The Human Rights-based Approach to Development (HRAD) is one attempt to put development on an ethical footing? Such a framework arguably has broad international commitment due to the widespread ratification of the ICCPR and ICESCR. Less controversially, or perhaps just less legally, the current international commitment to accountability, transparency and participation, etc. incorporates a similar concern with ethical means.

When do the ends justify the means and, more importantly, who should make such inherently ethical decisions? For example, any instance of HRAD will require interpretation in a particularly situation–who should make these decisions? And how? In developed countries the formal legal system seems to be increasingly involved in the determination of appropriate means. But is such a method always appropriate or even possible? Certainly it requires highly sophisticated institutional arrangements.

How does this look practically? Safeguards at the World Bank are one example whereby the Bank demands compliances with certain ethical means in the execution of projects. It’s also a reason why many countries no longer want to lend from the Bank, and would rather take “ethic-free” loans from the likes of China.

September 6, 2009

Coetzee’s 1999 booker prize winning novel Disgrace is disturbing and haunting. It’s also difficult to interpret, particularly for someone like myself who has little intimate knowledge of South African society. It’s lucid to read, but it’s certainly an emotionly and intellectually challenging novel. One aspect I found particularly challenging is the novel’s examination of the boundaries of sacrifice.

The two main characters, one the father and narrator and the other the daughter, represent two different worlds. The father is a professor of literature who lives in Cape Town and concerned with esoteric matters. The daughter lives in a small hobby farm in the country. The father cannot relate to the daughter’s choice of existence, but for the most part he understands and accepts her rural lifestyle. This all changes, however, when three men invade the remote farm, rob, burn the father’s face, and violently rape the daughter.

Change and progress results in conflict. Conflict between one’s values, conflict between one’s preferences, conflict between one’s desires. Resolving these conflicts invariably involves some form of sacrifice. For the most part individuals and communities are willing to accept some form of sacrifice to progress, but when is enough enough? What are the boundaries of sacrifice? What cannot be sacrificed?

For the most part the father can accept the daughter’s sacrifice of urban society. But he cannot accept his daughter’s wilingness to remain on the farm despite the attack and the potential for further violence. In contrast, the daughter, although pyschologically traumatised, does not believe that her boundaries have been reached. Indeed, she seems to adopt the view that the violence is a sacrifice she needs to make to remain on the land.

It is easy as a reader to sympathise with the father and dismiss the daughter’s postion, but Coetzee’s writing and character is hauntingly real. Futhermore, the book blurs the boundary between political violence, violent crime and something a kin to domestic violence. It’s left me wondering cultural construction of violence. Indeed, even in western society violence is deployed for ostensibly legitimate means. How, then, can one use violence to mark the limits of legitimate sacrifice ?

September 5, 2009

This is a fantastic book by a young Australian author from my hometown, Melbourne. It tells the story of an Aboriginal death in custody that occurred on Palm Island in 2004, and the machinations of the inquest into the death and trial of the responsible police officer that continued until 2007.

Of particularly interest to me was the book’s description of Queensland legal and police culture and politics, particularly the utilitarian use of violence in Indigenous communities by police and the politicization of the inquest by police unions. It leaves one with a far more socially and politically nuanced understanding of the Australian legal system as well as the nature of law more generally. Also of interest was the hints at parallels between the 19th Century frontier colony and the 21st Century contemporary state. A lot and not much has changed!

More critically, I didn’t buy the book’s suggestion of a similarity with the America’s liberal north and racist south divide albeit with the poles switched, i.e. a racist north and a liberal south. Perhaps I haven’t spent enough time in Queensland, but I really don’t think there is such a clear north-south divide in Australia and nor do I think that the situation in Australia can be likened to Southern segregation. If anything, the Australian experience has similarities to the treatment of American Indians on the American frontier, particularly after King Philip’s War in the late 17th Century.

September 5, 2009

I’m starting this blog as I am about to return to university and embark on a DPhil, so I’m aiming for an exploratory feel. The three themes I plan to explore–and by which I will try to categorize my posts–are: Tool Up, Dig Deep, and Look Out! This is the unofficial motto of my DPhil and now this blog.

Look Out–Don’t get lost in the Ivory Tower, keep an eye on the real world

The first two of these themes were the advice of a senior colleague, whose thoughtfulness I admire and who has written one of my favourite articles on development. The third is my own doing. Lets see if this works.